Several Indian vendors have honed what is broadly called the Global Delivery Model (GDM.) It is the ability to capture knowledge and specifications, smoothly transition that to offsite developers, and re-integrate the results at the client on-site location. The model requires several individual components to work well. These include knowledge capture/playback confirmation, hourly/nightly handoffs often on a 24x 7 basis, quality control and continuous improvement efforts, staff mobilization/demobilization as efforts scale up and down, onsite and offsite staff logistics, staff recruitment, training and retention, expense and time billing for teams across borders, demanding standards for security/business continuity/telecommunications connectivity at the offsite locations
Not trivial. But is it a “competitive barrier”? I have spoken to several Indian IT services executives who believe it is. They have honed this capability over a decade over hundreds, if not thousands of client engagements. It is part of their fabric. 3-4 years ago I would have agreed with them. Now, I am not sure it is that difficult to replicate. For starters the early Indian firms to build the GDM like Infosys and TCS have a well documented path of how they did it, and several of their alums have gone on to build it for mid-tier IT providers. Additionally three other sets of vendors are trying to replicate the model:
a) Western firms like Accenture, Sapient, Syntel and others. Each
has ramped up capability in India (and elsewhere) to thousands of
staff. They are using their Western brands to advantage in offshore
recruiting and already have established onsite presence at client
locations. Firms like Accenture already had remote solution centers in
the West in the 90s.
b) A number of ISVs could have outsourced product development to Indian services firms but for various IP and other reasons have chosen to build their own captive subsidiaries. In recruiting. they sell the fact that their engineers are working on cutting edge technology and their efforts show up in commercial products not just behind the firewall at an individual client. Oracle and others have successfully built teams numbering thousands of staff
c) A new generation of BPO vendors is replicating the IT GDM model in various white collar transaction processing areas.
Another reason these providers are doing in themselves is they can see gross margins of Indian IT services firms are in the 40+ % level. Even it they cannot be as optimized, the build v/s buy option looks attractive.
So, not sure the Indian IT services firms have a huge, sustainable advantage with their GDMs. Perversely, the newer entrants are competing for the same talent pool stressing the efficiency of GDM models. Staff turnover rates of over 15% are common in India IT firms - even more in the BPO sector.
The question to me is less can new entrants replicate it, but can anyone keep it optimized?